Qantas Airways has adjusted its service charges on its frequent flyer accounts following discussions with the Australian Competition and Consumer Commission, ACCC Chairman, Professor Allan Fels, said today.
"The ACCC met with Qantas last week. Qantas has made changes to its frequent flyer account service fees," Professor Fels said. "Qantas originally added a $2 Goods and Services Tax charge to a $20 service charge on its frequent flyer program. However, as the GST is only applicable from 1 July 2000, the exact pro-rata amount is $1.63.
"Qantas will now change its pricing to charge the exact mid-point amount of $1.63 on its frequent flyer accounts for this quarter and $1.88 for the next quarter. Qantas will adjust its accounting system to accommodate exact prices, including cents.
"About 184,000 of Qantas' 2.3 million frequent flyers have received invoices for $22 for account service fees on its frequent flyer program".
Previously Qantas adopted a pricing approach that included 'rounding up' 18 prices and 'rounding down' 31 prices to the nearest dollar. The prices related to elements of Qantas' customer loyalty program, such as the price of guest passes for Qantas Club members. The net effect on margins was expected to result in a small net loss to Qantas.
"The ACCC was investigating complaints about this approach several weeks ago and, contrary to some reported comments, had not approved the new prices.
"Qantas has responded quickly to the Government's clarification of its policy that no single price should rise by more that 10 per cent as a result of the Goods and Services Tax and is adjusting its pricing policies accordingly.
"The ACCC is pleased by Qantas' response to consumers' concerns and the continuing commitment to adhere to the pricing guidelines as expressed through the Public Compliance Commitment signed by Chief Executive Officer, Mr James Strong, in 1999".
"The ACCC met with Qantas last week. Qantas has made changes to its frequent flyer account service fees," Professor Fels said. "Qantas originally added a $2 Goods and Services Tax charge to a $20 service charge on its frequent flyer program. However, as the GST is only applicable from 1 July 2000, the exact pro-rata amount is $1.63.
"Qantas will now change its pricing to charge the exact mid-point amount of $1.63 on its frequent flyer accounts for this quarter and $1.88 for the next quarter. Qantas will adjust its accounting system to accommodate exact prices, including cents.
"About 184,000 of Qantas' 2.3 million frequent flyers have received invoices for $22 for account service fees on its frequent flyer program".
Previously Qantas adopted a pricing approach that included 'rounding up' 18 prices and 'rounding down' 31 prices to the nearest dollar. The prices related to elements of Qantas' customer loyalty program, such as the price of guest passes for Qantas Club members. The net effect on margins was expected to result in a small net loss to Qantas.
"The ACCC was investigating complaints about this approach several weeks ago and, contrary to some reported comments, had not approved the new prices.
"Qantas has responded quickly to the Government's clarification of its policy that no single price should rise by more that 10 per cent as a result of the Goods and Services Tax and is adjusting its pricing policies accordingly.
"The ACCC is pleased by Qantas' response to consumers' concerns and the continuing commitment to adhere to the pricing guidelines as expressed through the Public Compliance Commitment signed by Chief Executive Officer, Mr James Strong, in 1999".